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Powerball Jackpot Hits $1 Billion, How Much Would The Lucky Winner Take Home?

For the 2nd time in its 30-year history, the nation’s Powerball jackpot hits over 10 figures! Whoever is lucky enough to land this massive jackpot will be looking at a considerably smaller payout than advertised. The payout varies depending on the state the winner purchased the ticket in (for tax purposes), and the method in which they take payment.

Tax Implications

The lucky winner can claim their newfound wealth in one of two ways. The first option is taking the entire sum of the jackpot in 30 annual payments over 29 years. The second is you can claim a smaller lump sum of the cash up front, which is what most of the lottery winners opt for. The lump sum payment is estimated to be $497 million, and that’s even before the 24% federal tax which would withhold roughly $119.3 million, bringing the total winnings to around $377.7 million.

The taxes don’t stop there though! The winner of the lottery would also be subject to additional taxes based on their tax bracket for ordinary income, up to the highest at 37%. For example, if you were a single taxpayer with no additional income, no dependents, and no itemized deductions like large charitable contributions, you would owe an additional $64.6 million in taxes bringing the total down further to $313.3 million, and this is still all before state taxes get taken into account.

You Thought That Was It?

Now for state taxes, in New York, the state takes an additional 10.9% after federal and income taxes. That percentage is the highest in the nation when it comes to lottery taxes. However, if the lucky winner is fortunate enough to live in a state like Texas or Florida, they won’t see any additional lottery taxes being withheld because those states do not impose an income tax at all. In addition to the states, even some cities impose their income taxes, once again New York City takes home the honors of the highest tax rate for cities at an additional 3.87% in taxes.

Wrap Up

Even with all of these taxes taken out of the winnings, It is a safe bet that whoever does hit the jackpot will be more than thrilled with their newfound wealth. However, when looking at the bigger picture and taking everything into account it is frustrating to see how much money is being withheld from the winner due to taxes.

 
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